MANAGING YOUR EMOTIONAL EQUITY & TRADING CAPITAL

[FX4Newbies]

Hello Trade2Win Community,

In this thread, it is my goal to discuss the heart-mind issues that traders experience via discussions, and also from an experiential standpoint, i.e. through looking at and studying actual trades (via videos). Why actual trades? It is because during the trade itself is when the emotions tend to surface. In my trading journey, I have seen people panic when losing, which I think we can all understand, but it can also happen when winning. Emotions can be very tricky, and so in order to succeed at trading, we need to be able to handle them (the emotions) in a way that works for us.

This thread is about discussing and finding ways that would help traders to manage themselves better. Of course, a trader would also need a sound trading method or edge which they are able to trade. Once that method is in place, and the heart-mind connection is solid, then the path is ready for a trader to be the best they can be!

This thread is for traders who want to succeed at trading.

Looking forward to the journey!

 

[FX4Newbies]

Starting off, I would like to make some foundational statements:

1. Every trader is different, so each trader needs to have an understanding about what their emotional triggers are in trading.

2. Traders MUST accept the fact that trading is risky, and they can and very likely will lose money at some point.

3. The price action is designed to trigger the emotions of the fearful. If you trade impulsively, jumping in without a system or method, you're already trading on the proverbial "wrong foot".

4. Fear of loss is one of the most deadly fears in trading. There are others which we will discuss.

5. The trader is responsible for bringing COURAGE to their trading. There is no escaping it.

We'll take a look at this further...leaving this here for now.

 

[FX4Newbies]

Here's some FOOD FOR THOUGHT as we continue this discussion.

Most Forex brokers report that close to 80% of retail traders lose money. The question is, "How can that be possible with all of the FREE Forex information online?" Even brokers' websites offer free education. Well, the truth is, it takes more than information. Most people think that if they can just learn to trade, they will be able to trade. The question becomes, "Learn what and how?"

So where should a new trader start?

1. Should they open a Demo Account and go about learning a trading method?

2. Should they first speak with a good trader to get some other details before jumping in?

3. Should they evaluate their trading mindset?

4. Should they assess their fears about losing money?

All of these points for sure are part of the journey.

Many new traders though are caught up by the potential of making large sums of money, but never accept the reality that they can lose. Their expectation of the markets is skewed. Truth be told, most people have not been conditioned mentally or emotionally for trading in the financial markets, and especially the Forex Market, which is VERY volatile.

As we prepare to go deeper into the trading journey, begin to examine where you are, regardless of whether you're a Newbie or not. Be honest with yourself and write down where you'd like to be as a trader...not just the pips you'd like to be making, but the person making those pips.

We'll pick up this discussion from here...

 

[Simon54]

Agreed with the pointers. I appreciate you taking time to write them.

 

[FX4Newbies]

Agreed with the pointers. I appreciate you taking time to write them.

Most welcome Simon54. My goal is to help traders trade2win...literally! Without certain key things in place, traders could find themselves at it for years, not really knowing what the hindrances might be.

 

[FX4Newbies]

So, let's continue...

Maybe you are new to trading... a complete Newbie, or already trading but still trying to find your way. Where would be the "safest" place to start?

We already know you need two key components for sure (apart from the trading device and platform etc.):

1. A solid trading method.

2. A professional trading mindset and suite of emotions to manage yourself when trading.

That being the case, where should traders start their journey? Well before looking for a video online to "teach" you, or opening a Demo Account so you can get happy clicking and watching the profit and loss fluctuate, assess your view of money. Attached is a simple questionnaire that would get you to start thinking in the right direction.

Understanding how you are currently conditioned to manage risk (loss) is a BIGGIE! Most people, regardless of their success in other areas of life, are not conditioned to handle the "risk" associated with the loss of money. Why is that? Well, it's not just the money that is lost, but what that money represented to them...which is why you should not trade with money you cannot afford to lose. That attachment needs to be addressed by the trader.

There is so much that lies beneath the surface of trading successfully. For now, complete the questionnaire and do some introspection.

In the next post, we'll take another step.

 

[FX4Newbies]

Hopefully you have used the questionnaire to ask yourself some very key questions about money. What next?

The next step is to begin to plan how you would be able to make this a reality.

Step 1: What is your daily, weekly schedule like? Do you have time to spend sitting in front of the screen or do you need to trade on a more long-term basis?

Step 2: How much trading capital do you intend to start with in your LIVE account?

Step 3: Assess your levels of PATIENCE, DISCIPLINE, PERSEVERENCE AND COURAGE. EMOTIONAL INTELLIGENCE is critical. These are key ingredients you MUST have as a trader. Can they be developed. Oh yes...but it usually takes determination and consistency. The time it takes will vary from trader to trader. Believe it or not, once you have a reliable and solid trading method that you can execute, your personal development becomes the linchpin to your trading success: as you improve, your trading should improve.

Once you have processed through these three steps, draft a tentative TRADIING PLAN. Your trading method that you select should be one that harmonizes with all three steps.

In the next post, we will begin to discuss the types of methods that traders use.

Until then...


Take care,



FX4Newbies

 

[FX4Newbies]

As we begin to transition into the available methods for trading, know that every method does not provide the same degree of reliability on a consistent basis.

Next important point: when looking for trades, you should be looking for a trade that provides these two factors:

1. A LOW-RISK entry.
2. A HIGH-PROBABILITY profit target.

Your trading method should be as sharp as possible in giving you trades that meet both of those criteria.

In the next posts, we'll delve into those 2 points in more detail.

Stay tuned....


FX4Newbies

 

[FX4Newbies]

So, here's a question for you:

Which buy entry was the best example of a low-risk entry? BUY#1? BUY #2? or BUY #3?

Feel free to state your reasons.


FX4Newbies

 

[FX4Newbies]

At this point, I'd like to make this comment: YOUR BEST DEFENCE AGAINST LOSS IS NOT YOUR STOP LOSS, BUT A VERY SHARP AND ACCURATE TRADING METHOD.

Of course, nothing is guaranteed, but if you are being surprised by the market moves more often than not, something needs tweaking...


FX4Newbies

 

[FX4Newbies]

An additional comment on the current discussion:

Image by Pexels from Pixabay


It's a holiday week for the U.S. but this pic is intended to mean much more. If someone wanted to make this cake, they would need a list of the ingredients AND the method used to make it...and of course, any special tips and tricks to get it just right!

Sad to say, there are many traders out there with only half the recipe...and some, maybe not even that much. As the saying goes, "You don't know that you don't know...so how will you know what more you need to succeed?" That's one of the reasons it takes traders SOOO long to get to the place of trading profitably. Brokers are still reporting on average that 75%-80% of retail FX accounts are still losing. Why is that? And with all the free info online? How come? Could it be they have ingredients only and no method, or a partial method?

In trading, it is important to not just have knowledge but also UNDERSTANDING. With all your getting be sure to get a proper understanding. Learning does not always equate to having an understanding. Begin to examine what you have been using in your trading. Do you have the necessary ingredients? Do you have the proper method? Do you have sufficient skill and understanding to trade the method you would like to trade?

The next chart posts, I hope, will begin to be an eye-opener for you.


FX4Newbies